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6. Explain how Kool approaches. Also, explain how the differs from how you accounted for these expenses statement. INTEGRATION EXERCISE 6 Normal Costing versus Actual
6. Explain how Kool approaches. Also, explain how the differs from how you accounted for these expenses statement. INTEGRATION EXERCISE 6 Normal Costing versus Actual Costing LO 2-1, LO 2-2, LO 2-3, LO 3., Darwin Company manufactures only one product that it sells for $200 per unit. The company uses plant LO 3-4, LO 7-1, LO 7-2 wide overhead cost allocation based on the number of units produced. It provided the following estimates at the beginning of the year: 50,000 Number of units produced .. .... . $1,000,000 Total fixed manufacturing overhead costs . .... $12 Variable manufacturing overhead per unit produced During the year, the company had no beginning inventories of any kind and no ending raw materials or work in process inventories. All raw materials were used in production as direct materials. An unexpected business downturn caused annual sales to drop to 38,000 units. In response to the decline in sales, Darwin decreased its annual production to 40,000 units. The company's actual costs for the year were as follows: Variable costs per unit: Manufacturing: $78 Direct materials . Direct labor. ... . $60 Variable manufacturing overhead $12 Variable selling and administrative $15 Fixed costs per year: Fixed manufacturing overhead. .. $1,000,000 Fixed selling and administrative expenses. ..... $350,000 quired: Assuming the company uses normal costing (as described in Chapters 2 and 3): a. Compute the plantwide predetermined overhead rate. b. Compute the unit product cost for each unit produced during the year. c. Prepare a schedule of cost of goods manufactured and a schedule of cost of goods sold. Assu that any underapplied or overapplied overhead is closed entirely to cost of goods sold. d. Compute absorption costing net operating income for the year. Assuming the company uses actual costing (as described in Chapter 7): a. Compute the unit product cost for each unit produced during the year. b. Compute absorption costing net operating income for the year. Are your normal costing and actual costing net operating incomes the same? Why? Support answer with computations. GRATION EXERCISE 7 Capital Budgeting, Return on Investment, Residual Income LO 10- 0-2, LO 12-2 ons Company is a merchandiser with multiple store locations. One of its store managers is co product mix in anticipation of a strengthening economy. Her store would pectati
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